Episode #353: Artem Milinchuk, FarmTogether, “Everything Pointed Towards This Massive Democratization of Alternative Investing”

Episode #353: Artem Milinchuk, FarmTogether, “Everything Pointed Towards This Massive Democratization of Alternative Investing

 

 

 

 

 

 

 

Guest: Artem Milinchuk is the founder and CEO of FarmTogether, investment platform providing accredited investors with direct access to farmland. Artem has over 10 years of finance experience in food, agriculture, and farmland. He holds an MBA from The Wharton School, and a BA and MA in Economics from the Higher School of Economics. Prior to founding FarmTogether, Artem was employee #1 and CFO/VP of Operations at Full Harvest Technologies, a now post-Series A B2B platform for​ buying and selling​ produce. He previously worked at Ontario Teachers’ Pension Plan, Sprott Resource Holdings, E&Y and PwC.

Date Recorded: 8/18/2021     |     Run-Time: 1:03:53


Summary: In today’s episode, we’re talking about farmland! Artem is working to allow everyday investors the ability to invest in farmland and has surpassed $100 million AUM with over 30 deals in two years. We start by hearing about the process of buying part of a farm through the FarmTogether platform. We talk about trends in the space, including the impact of inflation, climate change and sustainability.

As we wind down, Artem shares his future plans for the company and what countries may offer an attractive investment opportunity.


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Links from the Episode:

  • 0:40 – Sponsor – The Idea Farm
  • 1:22 – Intro
  • 2:10 – Welcome to our guest, Artem Milinchuk
  • 3:33 – Starting off his career as an investment banker and working with hedge funds
  • 4:27 – What planted the seed in Artem to try his hand at farmland investing
  • 6:07 – Episode #246: Eric Sprott, Mark O’Dea, Oxygen
  • 7:48 – FarmTogether’s origin story
  • 13:08 – Why farmland is such an overlooked investing opportunity
  • 18:43 – Farmland as a hedge against inflation
  • 21:54 – How climate change impacts farmland
  • 23:45 – How they decide where to buy a farm and what kind of farms are appealing
  • 27:45 – Particular crops they generally like to avoid
  • 30:38 – Who can invest and what the investing experience is like on FarmTogether
  • 33:40 – The frequency of buying opportunities and average farm size
  • 34:19 – What tends to be the most popular crops and geographies
  • 35:21 – Episode #320: Shonda Warner, Chess Ag Full Harvest Partners
  • 37:17 – The business model and how the investor makes money
  • 42:13 – The ways in which people have been adding farmland to their portfolios
  • 45:26 – Long term risks to investing in farmland and if insurance is an option
  • 47:44 – What leverage means in this sector
  • 51:16 – Implementing alternative sources of yield and sustainability
  • 51:41 – Expansion, funding, and acquiring venture capital
  • 56:09 – Whether or not they’ll be offering an all-in-one fund
  • 58:32 – Learn more about Artem; farmtogether.com, artem@farmtogether.com
  • 59:18 – Artem’s most memorable investment

 

Transcript of Episode 353:

Welcome Message: Welcome to “The Meb Faber Show,” where the focus is on helping you grow and preserve your wealth. Join us as we discuss the craft of investing and uncover new and profitable ideas, all to help you grow wealthier and wiser. Better investing starts here.

Disclaimer: Meb Faber is the co-founder and chief investment officer at Cambria Investment Management. Due to industry regulations, he will not discuss any of Cambria’s funds on this podcast. All opinions expressed by podcast participants are solely their own opinions and do not reflect the opinion of Cambria Investment Management or its affiliates. For more information, visit cambriainvestments.com.

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Meb: What’s up, everybody? Today we have an episode on one of my favorite asset classes. You know it! Our guest is the founder and CEO of FarmTogether, an investing platform providing accredited investors with direct access to farmland. Today’s show, we’re going back down to the farm. Our guest is working to allow everyday investors the ability to invest in farmland, and has surpassed 100 million in assets with over 30 deals in 2 years. We started the show by hearing about the process of buying part of a farm through the FarmTogether platform, then talk about trends in the space, including the impact of inflation, climate change, and sustainability. As we wind down, our guest shares his plans for the future of the company and what countries may offer an attractive investment opportunity. Please enjoy today’s show with FarmTogether’s, Artem Milinchuk.

Meb: Artem, welcome to the show.

Artem: Thank you, Meb. Really good to be here.

Meb: Where do we find you today?

Artem: Today I’m in Portland, Oregon, where the home base is. Used to be in San Francisco, but we’ve been here fully remote in philosophy day once, when pandemic hit, we just really doubled down what was already working.

Meb: Was there sort of half the farmland is in your part of the world. A couple of interesting Portland pieces in the news lately, one, one of the hottest places in the U.S. recently, but two, a fun fact, and you can give me the boots on the ground review. We recently had Nathan Myhrvold on the podcast, and he’s written a 1,300-page book on pizza. Listeners, if you haven’t heard the episode, it’s awesome. But he says the best pizza city in the country is in Portland. Are you a pizza eater?

Artem: I am, and I would tend to agree. I’m carnivore, and I had the most amazing vegan pizza because my fiancé, she’s vegan. And it was so good. We drove away, came back five minutes later, ordered two more, ate them, regretted them, then felt bad that we had done so quickly. And this is vegan pizza. So, yeah, they have something special going on.

Meb: I love the food scene in Portland. We have a transplant doughnut shop in my town here in Manhattan Beach called Blue Star Donuts. And they’re incredible. I mean, they’re like $5 each, of course, but they’re really exceptional. Well, we’re going to get into all things farmland and investing here. But one of the things I saw on your background that I thought we would touch on, you come from a pretty cool lineage where you were a traditional MBA. Did you start out at the Ontario, one of the most famous well-run pension plans in the world, the Ontario pension plan? Was that your first job out of school?

Artem: My first job out of school is actually back in Moscow, born in Soviet Union, raised in Russia. And for a few years I was there in E&Y, Ernst & Young, and then PwC, and then a local investment bank. And then Ontario Teachers’ in 2008, which is indeed an incredible organization.

Meb: Would you have been under Claude Lamoureux? Is that who it was or was he just left?

Artem: I think he just left.

Meb: We had Claude on the show a few years ago, we’ll link to in the show notes, but one of the best pension fund managers. And I think he left right before you showed up. Did that plant the seed of the farmland natural resources bug, or what were you focused on when you were there?

Artem: I like, whether intentional or not, we’ll ponder, but it did plant the seed and germinated it and sprouted. Not to jump too far ahead but Ontario Teachers’ is indeed one of the most innovative investment organizations in the world, period, amongst pension funds, endowments foundations, it doesn’t matter. And it’s just incredibly future-thinking. So, them and other clean pension funds actually in a lot of ways defined and opened up infrastructure as an asset class, timber as an asset class. And so, being a teacher and having that global lens from a capital markets and asset classes perspective definitely gave me the confidence and resilience to keep going in the early days of FarmTogether because I just knew this is something that I would personally invest in as an Ontario Teachers’ employee. And so, one day they will.

Meb: You also did, it sounds like, one of the most Canadian things ever and at another famous natural resource investor’s, Sprott. What was the focus there, mining? Or what was it?

Artem: Yes, so, Sprott Resource is part of Sprott Inc., which is the child of Eric Sprott. And by the way, I always like when people put their on names in the companies. Some people think it’s bragging or prideful, I actually think it’s incredibly honest because you’re putting your name on the line, and you know that no matter what happens, it’s your name. I was at one of the companies that are called Sprott Resource Holdings, which was a publicly traded private equity company. So they invest in private assets but will be publicly traded. And they invest in various natural resources, but also farmland. And so, I actually had the opportunity back in 2013 when it was still very niche asset class to invest into farmland in Canada and Uruguay.

Meb: Eric was another podcast alum, so we’re hitting all the highlights of your career. We’ll see if we can find any more by the time we’re done. Was the next stop to start FarmTogether or was there something else in between?

Artem: It’s interesting, but, after Sprott, I was also back at Teachers’ doing a more of a public equity strategy focused on emerging markets, but also a number of food companies there, and then also a statutory family office that was sort of very diverse in how they thought about investing, but also had some interesting food products there, more so in the kind of innovative branding side. And then in 2016 is when I just really couldn’t shake off this belief that farmland should be this hugely investable asset class and be also just really was itching to build something.

Being an investor is amazing in so many different ways, but one thing that I missed was having a role after you write the check, put in the capital. And so I joined a startup of a fellow Wharton classmate, Christine Moseley, that is called Full Harvest. It’s very, in a lot of ways, similar to FarmTogether. It’s a marketplace for large buyers, you know, let’s say, juice companies to buy what’s called number two produce from farms. And number two produce is, let’s say, an apple that doesn’t quite look shelf-ready but it’s still a good apple and a lot of that gets thrown out. So Full Harvest buys that and then sells it directly to buyers. So it’s a really great kind of win-win-win organization. And that’s where I both got kind of my startup chops, but also really got ignited by this idea of agriculture actually having a very leveraged impact on sustainability, on climate goals, on feeding the planet. So, it was a very cool experience. And FarmTogether was started after that in 2018.

Meb: 2018, all right. Well, it’s funny because the last five years have seen really an explosion in startups tackling the entire food ecosystem. You mentioned one, but also misfit markets and perfect food, and then all the ghost kitchens, and delivery, and groceries, obviously, across the board, pandemic accelerated a lot of that. But we talk a lot about farmland here on the show. And we have had one of our co-workers on here before to give us a brief overview. So why don’t you tell us the origin story? So you said, all right, farmland, calcified, antiquated asset class, we’re going to shake it up, 2018. What was the sort of genesis? Did you guys just fund this out of a bootstrap credit card idea or what? How’d you get started?

Artem: As you mentioned, sort of, the seed fell initially at Ontario Teachers’, and was just in a way, for me, was an academic exercise. But I mean it in the best way possible that I really spent a lot of time thinking fundamentally about where portfolio construction is going, where people invest their capital, where the traditional 60/40 portfolio is going, stocks and bonds, what’s going on with interest rates? And it’s just everything pointed towards this massive democratization of alternative investing. And we’ve seen this in so many different asset classes from crypto, to, you know, exotic cars, to art, to wine.

And with farmland, I think what really piqued my interest was how resilient and uncorrelated it was during the last financial crisis, not the COVID one, but 2008, ’10 when farmland was up almost 23% the increase index. And just seeing at the same time 2008, ’10, which was sort of my early financial years, I personally lived through it looking at the red numbers flashing on Bloomberg. I have a screenshot where everything is red. It just showed you that, look, there’s nowhere to hide anymore, and capital is global, and it’s hard to find uncorrelated asset class.

And so, for me, seeing farmland being a $10 trillion market that is so incredible in so many different ways, that was the aha moment. But the way it got started is this perfect confluence of events where I was at Ontario Teachers’ but thinking about starting something that I would be really passionate about. And at the same time, I was personally looking to invest in farmland and couldn’t find a lot of options. Very, very few options. And then my friends who then became first angels in FarmTogether, co-founders of Grammarly, they came to me as well saying like, “Hey, business is starting to go well, we want something that would be opposite of tech portfolios because right now our personal career is fully tied in Grammarly. What’s something opposite of tech?”

And I was like, “Farmland, of course.” And they were like, “Yeah, that makes a lot of sense. Help us find the right instrument.” And for them as well, I couldn’t find anything. And so, it was like, me being kind of a smaller check, them being a larger check, and then Ontario Teachers’ being even larger checks, all of them couldn’t deploy capital. Ontario Teachers’ because it actually used to deploy a lot and it’s a very fragmented market, and I and my friends couldn’t do that because the average farm was very big for us to invest in. And so that’s really the genesis and the first round, Grammarly guys among other people participated in that. It was about half a million round with a number of angels and that’s how the company got started.

Meb: What was the initial process? “Let’s just go buy a farm and run it?” Hop on the tractor and figure this out or was the vision of today pretty similar to what it was three years ago?

Artem: The vision is remarkably exactly the same. If I look back to my first very poor slide deck, writing out all the things I want to hit, and one, we’re actually remarkably on track in terms of the numbers, but also on kind of the features. But the way it got started was slow. It was figuring out what’s the right geography? What are the right partners? What’s the right farm to go with? And we had a bunch of false starts. We were looking at a few different models back then, all within sort of the general vision, but it was, like, do we want to be really small checks almost like Farmville for farmland? Do we want to maybe be more like open door for farmlands? Meaning you is having an all-cash offer for farmers looking to sell? Do we want to do something in between?

And I think what really stuck the most is just working with farmers that are looking to either sell the farm because they’re retiring because they’re looking to optimize the broader portfolio, work with them or the farmers to rent the land, to operate the land, and then just sell units in that farm as shares on the platform. And, you know, that first one was 100,000, took us two months plus to sell that. Someone came in and ended up writing a largish check to cover the remainder, which was great.

Meb: What was the first farm? Were you guys doing corn in Iowa? Was it blueberries?

Artem: Almond farm in California, 510 acres. Knock on wood, that farm is doing quite well. We had, I think, 13 people investors total, friends and family, some completely random that found us online, which was great, because that’s how you know you have a business. And today, our recent farm was 12 million in equity checks and closed in two 48 hour windows and was oversubscribed.

Meb: It kind of reminds me of almost the sneaker drop methodology now where it’s like an open window for investors who’ve already invested in a farm and then it reopens to first-timers.

Artem: I’ve never heard that analogy. I love it. I’m going to steal it. It’s actually very true and very similar.

Meb: This is probably old hat for you and also the listeners because we’ve talked at length about my trials and tribulations, and agony, and ecstasy of being a remote farmer for a number of years. But going back for a really long time, we just did wheat harvest with my son in Kansas. And it’s nice because wheat prices are up. That’s not always the case, as we know, with any crop. But it was a 10,000-foot farm case. We now know that Bill… Well, I guess it’s going to be Bill and Melinda. We might see a lot of farmland come on the market here soon, but he’s the largest farmland owner in the country, what does he see that most of us don’t and why is this a great place to put money?

Artem: Yeah, absolutely. It’s important to put things, first of all, in perspective. So, while Bill and Melinda Gates Foundation is reported to be the largest farmland owner in the country at about 230,000 acres, there is 900 million acres in the United States. So it’s still a drop in the bucket. I mean, what is it? It’s not even 1%, right? It’s something tiny, which just shows you how massive and amazing the farmland market and the agricultural sector is in United States and why U.S. feeds the world. And then, secondly, for them, it’s also tiny given the huge portfolio.

But the reason that I think they invested in it, and this is just my guess, I think is the same reason that organizations like Ontario Teachers’ now have invested hundreds of millions of dollars, why the Canadian pension funds have done the same, it’s one of the most amazing long-term investments. When you think about our civilization, you know, 10,000-foot view matched with 10,000 years of history, that’s how long, if not more, agriculture has been around. And our civilization started with agriculture, right? Really, before that, it was hunter-gatherer. And then Egypt, Nile agriculture started. And it’s still, in a lot of ways, the same stories today, drought, famine, water issues. You know, you go back thousands of years with the Bible and it’ll be the same issues. David with seven years of plenty, seven years of famine.

And so, I think it’s an asset that doesn’t really change. And now we have climate change, climate emergency now that will impact where farming is done and how it’s done. But it doesn’t change. And so, in that way, everything else changes. Companies come and go, buildings dilapidate, bridges need repairs. Farmland is not even depreciable. If you look at the IRS tax code, they will say land is not depreciable. So if you wanted to run some tax benefits, there are, but not land depreciation. And so, for someone like Gates Foundation, Ontario Teachers’ that have planning periods that are, you know, 10 years, 70 years for Teachers’, finding an asset that matches in terms of cash flow, what we call asset-liability matching for that long is extremely hard.

And so farmland is almost unique in that. So I think that’s kind of the 10,000-foot view. And then, of course, for a lot of shorter-term investors, I’ll just rattle off some numbers, taking the last 30 years and the NCREIF farmland Index, which is the institutional index, ’92 to 2020 return has been, on average annually, almost 11% risk, one way to measure to a standard deviation might take some issue with that, but that’s 6.8%, which is much lower than stocks, real estate, and U.S. rates, and somewhat similar to bonds. And then, you know, the Sharpe ratio return to risk is 119 for farmland, which is more than one, everything else, stocks, bonds, real estate rates was lower.

And then another way to think about risk, which is how I like to think about risk, can I lose my principle? And with farmland, making sure that you buy it at the right price. And with California now, that’s making sure that you have ironclad water so you don’t have a stranded asset, which is what we extensively underwrite for, it’s hard to lose money. So farmland in the last 40 years had maybe two or three quarters of negative returns minus 0.1, 0.3%. And in the last 50 years, price appreciation was an average 5.9% a year. And that’s because population was growing. Water issues, climate issues, urbanization, land is actually disappearing.

We have a decrease of supply of farmland. And productivity is not going up as high as it used to. So, you have a finite asset that produces the most important thing we need, food. And so, that’s why I think it’s just incredibly resilient kind of asset class. When I think about my portfolio construction, I would start with farmland, and then I would go stocks, bonds, crypto, tech stocks, but that’s sort of my foundation for long-term investing. Yeah.

Meb: Yeah, there’s two comments I’ll make, one is, we joke about the old Talmud portfolio, which is 2,000 years old, which has let every man invest a third in business, so we call it stocks. A third in land, which in this case is literally farmland, but we say real assets, so, real estate, farmland, natural resources in general. And a third keep in reserve, which we just call bonds, which isn’t that far away from the global market portfolio, if you include the private assets, because the biggest missing piece of the global market portfolio for the average public investor is farmland, it’s farmland and single-family housing. And that’s to an extent becoming easier through various means.

But there’s a picture on Twitter I’ll have to drum up of me walking through a wheat field. And I love posting it on volatile or down days in the stock market because I say, here’s me thinking about the volatility of farmland, which is just like a beautiful blue sunny day out in the middle of the farm. So, this fog of illiquidity is actually a feature, you know, it’s a good thing that you can’t check the price quotes every day on Robinhood and elsewhere.

Before we get into specifics of FarmTogether, talk to us a little bit about inflation. This has been a topic that, for most of my investing career, is not something that people really discuss, to the extent that it’s a factor. Really, it was 40 years ago, the last time we really saw things that were anything other than a disinflationary environment. We’re starting to see it. What are y’all thoughts there? Talk about farmland in that capacity, is it a good hedge? Is it a bad hedge?

Artem: Fiscal year, it’s just crazy how quickly things can change, because I’m thinking 2008, ’10, and the tips were trading, I think, at negative yields where essentially the market was saying there’s not going to be inflation for 10 years, then we had these periods of deflation and people were worried about the Japanese scenario. And it’s just never has been, thankfully, an issue for people for many years in the Western world. So I spend my ’90s and early ’00s in Russia where you had currency crisis, bank crisis, rapid inflation. And so, my dad, he kept, like, a huge bag of sugar in our storage unit and we had like potatoes because you had to spend, money would just become devalued. And I think we kind of lost that muscle a little bit in how to think about inflation as a consumer and what it means for us in terms of things.

And for me, personally, what worries me as well is that it’s one thing if, okay, we had a period of time where for a few years inflation might not be 2%, but “4% or 5%,” but it would be predictable across the board, call it catching up for the second decade of the year 2000. Okay, great, right? But that’s not the case. We have used car prices doubling suddenly, right? We have spikes in food prices, fuel prices. So it’s this kind of whipsaw of inflation that flares up randomly, and also deficit that is the big issue.

So, I’m worried about inflation, personally.

In terms of the business, farmland is one of the best hedges against inflation.

In fact, when we looked at gold performance and farmland performance during periods of inflation, farmland did even better than gold occasionally. In five periods of high inflation, 20th century, farmland outperformed the S&P 500 quite handsomely. Typically, you know, we think of equity, especially growth equity as like, this is my inflation hedge, because most of the revenue is going to come in the future when they’ll be able to have pricing power. And it’s just really cool to see on data that farmland has done quite well, historically. Farmland products, it’s not just, you know, food. It’s what we call food, feed pure fiber. And so, the farmland products go literally into hundreds of products that compose the CPI. And so, it’s almost a mechanical relationship between prices of farmland and ag products and inflation.

So, we have seen tremendous amount of clients that have invested with us in the last six months with that expressed view, they tell us explicitly, “I want inflation protection.” Because we have different investment products, right? And they say, “I like that this investment product has no hedging, no capital gains. I get to participate in the full swing of the commodity price and land prices.” I think it’s probably one of the best hedges out there and we just want to bring more to people.

Meb: Before we hop off on to y’all’s actual platform, it’s been pretty forefront in your neck of the woods as well as most of California. How does climate change start to play into y’all’s thinking in any capacity, whether it’s diversification across farms or risk to farms? Any general thoughts there?

Artem: Yeah. So, my colleague that you mentioned, that was on your podcast before, David Chan, actually his major is in atmospheric sciences from Cornell. And the reason he went into ag is because he said, “Look, we know enough about climate that we need to do something about it.” In a lot of ways, thinking about climate has been part of our investing DNA from day one. So, looking for reliable water sources as much as we can in California, accounting even for extreme scenarios, and how we think about it has always been important. And today, we also are increasingly looking to partner with a number of these new climate risk companies that have emerged, that have matured. It’s not that we didn’t want to use them before, it’s just that there’s only so much you can do in terms of putting one foot in front of another. So, what we’re doing first manually, now we aim to do in a more kind of systematic, almost algorithmic programming basis, yeah.

I mentioned, in my view, farmland does have a lot of risks, but becoming a stranded asset where you don’t have access to water or where you have too much water…you know, Meb, when you talk about real crops, it’s too much water. So you’ve got to add drainage, for tiling, drainage, and also the things that you need to account for. And then you also can play offense with climate. And what I mean by that is that certain regions will have better conditions to grow. So, Michigan, Minnesota, South Canada, Ontario, British Columbia, becoming better places to grow, like, I’m hearing that Napa Vineyards are starting to look at British Columbia, and planting around the lakes is really interesting. So, yeah, crazy times.

Meb: Let’s sort of talk about, as a good jumping-off point, kind of y’all’s process. And it’s up to you, you can choose to either just talk about it generically or talk about it with a specific use case in mind. I was trying to look to buy an organic pear farm interest today. And you guys, cool part about your process, is you have, A, a lot of materials on the website, but B, straight up 60 slide webinar on each property that is extremely thorough, that, listeners, check out later. I learned more about pears. I printed out a brief history of pears, learned more about pears than you could ever want. So, walk us through, from start to finish, how this works. You guys look to buy a farm. How do you go about it? Where do you find one? All that stuff.

Artem: Yep, absolutely. So, again, I’m going to start with a 10,000-foot view, and please, you know, interrupt me if I go on for too long. But we start with, honestly, which country will it be in? And we said the United States because when you think about farmland, it’s, again, long-term. And unlike a lot of investments, you can’t really move it if something is going wrong in the country. So we need iron-clad property rights, and U.S. has that. Some other places don’t have that. So we’re not investing there.

Next, we think about crops. We want to be in industries where the United States has a competitive advantage or is a leader in that particular crop. So, corn, soybean, almonds, incredible global industries supported by infrastructure, by shipping, by politicians. That’s all fantastic. So we want to be in those industries. By the end of the day, it’s a commodity market and large scale players win. Next, we look at consumption trends, snacking, healthy nuts, fruits, vegetables. There’s a definite trend towards that. So we want to invest in those industries. Next, we’ll look at domestic markets. Sometimes U.S. might not be the largest producer of a particular commodity but it has large domestic market. And so, the benefits of transportation, branding, trust, all play into it.

And so, in doing this analysis, we converged on permanent crops, most of them are tremendously good investment, role crops, corn, soybean, and specialty, some kind of call it more specialty crops, more one-off things that have made a strong buy or a particular variety. We really like Washington State, which is where the pear you were describing is. Amazing water. So, the main kind of water resource is the Columbia River, which all of agriculture in Washington draws maybe 1% to 3% of that water. So there’s no risk that we see from water shortages. Excellent operators, friendly business environment, you know, certain parts of California right now, certain counties, they don’t see agriculture as important to them. And so, you don’t have that friendly political climate. Washington has that.

And then of, course, from there, we say, “Okay, can we find the right operator?” Another way that I should mention, probably the second way that a farmland is valued, there’s no one to farm. It’s all about the people. You can have the best farm and no one wants to farm it, it’s a scenic place invest. So we have excellent partner in Stemilt, one of the largest growers in the country, third-generation family business, very strong values. Again, it’s all about the people in this business, and so, tremendously hard-working family.

And then from there, we look at, you know, more mundane things. Is the price right? Are we comfortable with the cost? Are we comfortable with the hold period? Are we comfortable with the pricing that we project for pears, for apples? Is this pricing in line or below the last 5, 10 years? Are the trends up? All the usual things you do, right? In analyzing any investment. And so, all that combined goes into that 60-slide presentation then. That’s a lot of slides that our team presents. And then we try to answer as many questions as we can as well. And really, I hate selling. Like, I come from a buy-side. I know it was in marketing and sales, our philosophy is, let us tell the story, educate, describe the risks, the opportunities, and let you make a decision.

Meb: You hit on a couple of topics that I want to explore a little bit further. You were kind of talking about macro trends, crops, ones that are attractive. Are there any particular crops or areas where you say, “Actually, we kind of want to avoid these for particular reasons?” Maybe it’s not you always avoid them, but ones that you shy away from currently?

Artem: Yes. So, currently, it’s parts of California that don’t have strong water rights. We’ve known this for a number of years and our investment director literally wrote a white paper on the California water regulation called SGMA, Sustainable Groundwater Management Act. So the way it works, just to double click there for a second, every kind of water district needs to present a water plan to the kind of state authority and then the authority can reject or approve the plan. And so, as you can imagine, there’s a lot of uncertainties and different districts and different stages of that. And then years like this one where you have extreme droughts can throw an additional wrench into the process.

So when we think about where we want to be, we say, “Okay, in this six SGMA scenario,” so, you know, five, four SGMA, maybe not quite six SGMA. “But in extreme scenarios, do we still have water in that scenario?” And if the answer is yes, then we are likely to invest. If the answer is a maybe, we will take a pause. And it’s not to say that, look, California is going to be around. There’s no way that California is not going to be next state. But right now, there’s a lot of shakeout happening. Projections are that about a million acres out of 9, 10 million acres in California will have to go fallow, stop producing, because of water issues.

Now, the new infrastructure bill has introduced some funding for water infrastructure in California. Now, common thing we have in California is a lot of water, it just doesn’t get to where it needs to go. There’s a ton of water that just gets washed into the ocean but there’s no infrastructure to get it to the farm. So if you ever drive up and down the I5, you’ll see those huge billboards, “Invest in water infrastructure.” So that’s kind of the area you want to stay away from. Now, look, as we think about investing, it’s always a portfolio approach. If we can occasionally get a farm that has risky water, but is selling at an amazing price and we can bundle it with other farms, and we just say, “Look, this could be a great return, but you could lose all your money, invest at your on risk, think about your total portfolio and go for it.” I think investing it’s about kind of the risk-return. And if the return is there, maybe the risk is worth taking.

Meb: It seems like you guys concentrate mostly on the West Coast up through Washington and maybe in the Midwest, is that right or…?

Artem: That’s right, yeah. We are right now in Washington, Oregon, California, Illinois. We’re in Oklahoma now as well, and looking at places like Florida, Minnesota, and then potentially New Mexico, Arizona. There are a lot of great places in U.S. For me, coming from Russia, seeing how many climate zones and geographies there are and how accessible they are, I mean, it’s no wonder the U.S. is such a global agricultural powerhouse.

Meb: So, let’s walk through, from an investor standpoint, what happens when you do a farm drop, all right? So, pear farm coming online. Tell me about it. The portal is open. People can kind of review all the materials, but how does it all work? Signup process, minimums?

Artem: Absolutely. So, the signup process is very simple. You go online, you register in a few minutes, you answer a few questions. Because of SEC regulations right now, it’s only accessible to accredited investors, meaning that you need to have a certain income, 200k individual, 200k couple, or a million dollars in net worth, excluding your primary residence. And right now there are some new ways where if you have certain professional licenses, you could potentially qualify. Although it’s still, you know, hairy.

Meb: I’m ready for it to get to a driver’s license style test. If you’re smart enough, SEC, IRS, FINRA, all the regulators, you guys need some help writing it, hit me up. I could probably write it in an afternoon. And it’s so antiquated. And so, like, good intentions, I think from the early days, trying to get people from…but in a world of the internet with fully transparent disclose knowledge, when you can still trade things like crypto FX at 50 to1 leverage micro caps, pink sheets, options.

Artem: Yeah, weekly out of the money options.

Meb: Preaching to the choir, but I think they’ll eventually get there, but it’s moving in the right direction at least. Okay. So you got to be accredited, what else?

Artem: The minimums right now are typically 15,000. Although, trust me, like, we’re working hard to lower the minimums and open this up to non-accredited investors. There’s nothing standing in our way to do that. It’s more just, there’s more resources needed. And you want to make sure that it’s all worked out logistically. If … decides to invest, I want to make sure that everything’s crystal clear and we can support that kind of investment. And then, from there, there’s a lot of educational materials, previous webinars, blog post to familiarize yourself with investing in farmland. You can reach out to us directly as well to schedule calls, to answer questions.

So when a deal job happens, first, we will announce it. And it will be via email, on social, you know, you cannot miss it. And then we will have a deal page go live, where you can just go in and read a bunch of materials, download perspectives, things like that. Then we will have a pre-launch webinar that you mentioned, where we will present the deal, answer any questions, then the webinar will be recorded. So you don’t have to move that time off. You can always listen to it later. And again, email us with questions, call us, we’re very responsive. And then after that, there are typically two stages. Stage 1 will be either for new investors or existing investors, depending on the deal, where you have 48 hours where only this group of investors can invest. After that, it’s the second group, and then it opens up to everyone. Although typically, it’s been sold out in those two stages. So, 50% will be reserved for new ones, 50% for existing ones, because we really want everyone to invest that wants to, it’s just we don’t have the pipeline right now, so we’re trying to be fair, as much as we can.

Meb: How often are y’all offering farm drops? That’s my description, not FarmTogether’s by the way. But how often do y’all do these? Like once a month, once a week?

Artem: It used to be once a month, now I think we’re getting to something more like once every two weeks. It’s also some farms will be much larger, some will be smaller. We want to also offer diversification by crops and geographies.

Meb: So what’s the traditional range in farm size as far as valuation or acres?

Artem: Valuation’s probably easier because acres really vary. So, typically, on the smaller side, call it 3 to 5 million, on the larger side, 15 million. So between those ranges.

Meb: Give us a little OkCupid style in-house analytics, what has been the most popular, either you’re surprised or not surprised at, where you do some of these offerings and you’re like, “Man, I can’t believe people are just clamoring for blueberries? Like, why does everyone just want blueberries and no one wants soybeans?” Are there any particular styles and geographies that have been more popular than others?

Artem: I would say Washington and apples have been just a constant hit. No matter how many of those we put out, people just scoop them up. We had organic conventional new varieties like Cosmic Crisp, old varieties like Gala Honeycrisp, and people just keep buying them. And then what was a pleasant surprise we launched a new geography, pecans, which, the story about pecans is kind of like where almonds was 10, 15 years ago. There’s now a strong marketing board launched a few years ago. Pecans are very healthy, used in a lot of different locations. And, you know, we’ve just seen tremendous demand for those. But you think pecans is not something that you eat every day, not something you see every day, but yeah, people love them.

Meb: I’m a huge pecan fan. We had another farmer on here, Shonda Warner, and she had mailed us some hazelnuts. And it’s funny, they didn’t even taste like hazelnuts. They were like the best thing I’ve ever had in my life. So, you guys need to start like a FarmTogether store where you can just order direct-to-consumer produce too.

Artem: I would love to do that.

Meb: So then now you’re also a SaaS company. You’re an asset manager and a SaaS company because you have subscription farm boxes from your top farms around the country. I would sign up for one of those in a heartbeat.

Artem: As soon as we launch it, you don’t need to, you know, Meb, we’ll give you a friend’s and family package.

Meb: Good. Good. Okay. So, I go, I sign up, I secure a spot for my pear farm, what happens next?

Artem: Yeah. So if you like a deal, you go online, you select the market you want to invest, click Invest, link your account either through ACH wire, and then sign a subscription form online via Hello Sign, click Invest, and then Done. Honestly, by tying myself…and I think you could get everything done, I mean, you should still read all the documents, but when they’re standard, repeatable, you kind of get used to them. But you could become a farm owner in like two or three minutes.

Meb: And I saw that you guys even have integrations with shops like Alto IRA and others, so you could actually technically do this in retirement accounts, right?

Artem: That’s right, retirement accounts, trusts, solo 401(k)s. By the way, really important, you can also do what’s called a tick or a 1031 exchange. So if you have a real estate property, you can actually exchange it into a farm offering at a tax-advantageous manner. So, a lot of different formats.

Meb: Interesting. And what do people…? That’s six months you got usually from selling the property to redeploy?

Artem: That’s right. Yeah. There’s some nuances, but yes, if you own an apartment, you sell it, you could roll it into a farm and not pay capital gains taxes on your real estate holding. Yeah.

Meb: Well, avoiding taxes. Everyone loves that. All right, so, talk to me about two things, fees. So, what’s the business model for you guys? And then, also, how does the investor make money?

Artem: Yeah, so the way investor makes money is from two main sources, the price movement in the land. And so, typically, we aim to buy at or below market and then there’s development that happens. So, trees mature, just the long-term price appreciation. So, as the farm gets sold, you will receive, hopefully, the price appreciation. And then, secondly, it’s the current income paid out typically every year. And the current income is based on either the rent that the farmer pays to the landowners based on a revenue profit share, or based on the direct income that the farm receives.

So, the pear farm, for example, it’s a direct operated model. The farm runs the full budget. So it’s responsible for all the costs, but gets to keep all the profits. And that model is the best, in my view, when you have a reputable operator, which in this case is Stemilt. So we like those models. In raw crops, typically, it’s more kind of rental model, where you get the fixed fee plus some sort of kicker based on inflation, plus maybe a revenue share or an additional bonus based on commodity prices. Now, our fees are quite simple. So we charge typically an annual management fee of about 1.5% of the deal size. We charge a kind of one-time admin fee at close, that is about 2%, typically, and then a performance fee, which is how do investors know that we farm together our line and the management is a percentage of net operating income, which is typically about 5% of net operating income.

Meb: Each project, obviously, will be different. And of course, it’s uncertain, but you guys do have a sort of targeted return. And part of it is the income, part of it is potential appreciation. How do you think about appreciation? Is it something that you just base case it to historical? Are you doing historical plus forecasted based on, you know, X, Y, Z? How do you guys come up with expectations?

Artem: We definitely don’t use historical as a primary driver. What we use it as is a sanity check, because very rarely we would use that 5.9% price appreciation metric I mentioned on all our farms across the board is kind of just, in general, I think it makes no sense. So the way we look at it is several ways. One, is we look specifically at the region, the crop, what has been in the last 5, 10, 15 years. How has the pricing done there? And so, a lot of our deals, the price appreciation of the land will be, you know, 3% 4%, 5%, which is quite modest, I think.

Then secondly, more importantly, what we do is that we do a cap rate analysis. So when we assume an exit price of the property in 10 years, typically, at what cash yield do we assume the buyer will buy it? I argue with my investment director all the time because I think we’re too conservative, but it will be like 7%, 10%, 12%. So I think that’s a good sanity check as well, because at the end of the day, you’re buying a property for its cash flows. And so, if I’m buying a property that straightaway is going to yield me 10% profit every year, that’s a good deal, because I tell you, like, we cannot buy right now deals that will be 10% cash flows day one. Like, those don’t exist. And so, I feel comfortable with our price appreciation, underwriting is that our exit cash yields, in my view, are quite conservative.

Meb: So, an investor gets sort of this cash distribution every year and then what happens at the end of 7, 10, 12 years? Do you liquidate the farm? Do you offer secondary liquidity? Like, how does it work?

Artem: Yeah. So, great question. And just talking a bit about secondary liquidity, we are working on a secondary market where you’ll be able to trade your units in and out, maybe once a year, maybe once a quarter, maybe even sooner than that. Definitely don’t want Robinhood, as you said, we still want you to walk around and not worry about mark to market every day.

Meb: Well, good. I will be the cheap bastard low bid on anything. So, if somebody wants to get out, you can always call up Meb and say, “Hey, Meb, we got something for you.”

Artem: I’ve got a sweet deal for you. Yeah, exactly. Because, you know, life happens. And sometimes it could be for bad reasons. Sometimes it could be for good reasons. Maybe you have a better investment in front of you, you want to exit, even if it’s a discount. So we want to give that secondary liquidity. Most deals have a 10-year hold period. And if anything, I think it’s a little short, farmland is a long-term investment. And sometimes we get questions, why are you selling it in year 10 when it’s like just when the farm starts hitting its peak production and has many years of that? And that’s because, unfortunately, being crowdfunded, we need to find that common denominator that works for most people, and 10 years is that. So, what happens after 10 years is, yes, we look to sell the farm. Now, thankfully, we have a clause in our agreement that we have two one-year extensions to sell the farm. So if it’s year 10 and the environment is poor, we’re not forced to sell. We have another two years to keep running the farm and wait better pricing. That’s how it works right now.

Meb: How do you guys talk to investors? And I’d love to hear any insight. I assume the most are accredited individuals, but I could be wrong. There could be Investment Advisors doing allocations for their clients, could be institutions working with you guys. But that would be my assumption. How are most people approaching it? Are they sort of building a portfolio over time of various vintages? What’s the sort of insight into how people have been adopting this over the past three years?

Artem: Yeah, definitely seeing this sort of portfolio building where people are looking for different crops in different geographies. And right now, we’re still not quite at the scale straightaway or for, let’s say, a portfolio of 10 properties, where we can say, like, “Here’s a ready basket of 10 properties, that you’re diversified straightaway.” And so, yeah, people just buying across different crops and geographies, I would say.

Meb: And do you have any institutional or advisor-focused front or back end, or is it just kind of treat everyone the same? Because I remember in the last conversation, you guys were at least talking about a sort of boutique offering to where if I called you all up and said, “Artem, crew, I got 50 million, can you guys do it for me? I don’t want to deal with this.” Is that something that’s possible?

Artem: Yes. So, coming from Ontario Teachers’, I always thought that this is a great product for pension funds and even retail investors but in a format that would be, let’s say, a Fidelity type fund or something like that. We do have several programs for larger investors. One is called a Bespoke Account, where we have a few million dollars to invest, either as a family office or on behalf of someone, we will find a farm just for you. And you’ll be the sole investor there. And that has some benefits, some with better tax treatment. You can spread out your cash outflows if it’s a development over more years. So we do have that program. We do have some institutional clients, both on the platform just investing into individual deals, and then investing into these custom products with us. These are not yet large institutions, but this is professional wealth managers that have chosen to work with us in our team because they think it’s a differentiated offering. So definitely set up for that. And then we have a very clean and clear investment policy to make sure that there’s no adverse selection. Every farm goes through the same due diligence and underwriting process so that everyone gets a fair pick.

Meb: How often do you guys kick out the farms during due diligence and what are the main reasons? Is it valuation? You referred to water earlier. Is it something else?

Artem: It depends how we define due diligence, because the way it works is that it was sort of due diligence at every step of the funnel, but if we were to define it as due diligence after signing the escrow and putting in then deposit, then not that often. Actually quite rare. We did have a deal in Q1 where already during the escrow, we found that the water wasn’t to our liking, it was a little too risky, and so we walked away. But most of the times, especially because of, you know, the tech that we use, and both on-farm satellite imaging and just experience that we’re developing in certain regions when we do underwriting one time, let’s say for a water district that we know that deal was good. It’s not that often that we will actually walk away, but it can happen and it most definitely will happen again and again because that’s what due diligence is for. Certain things you just cannot analyze until you are in escrow.

Meb: Once it’s up and operating, what do you guys see as the main risks? Long-time listeners have heard me moan about one time we were doing a wheat harvest and our combine caught on fire and burned down the entire crop. Thankfully, we have insurance. So, two-part question, what are some of the risks that you guys have to deal with once it’s operating? And two, do these have traditional insurance that covers operational risks?

Artem: Yeah, definitely. So let me run you through the main risks. One risk happens before you buy the farm, which is just making sure you buy at the right price. So you have to look at comparable and you also, for us, rate validation has been loans because a lot of the farms take on debt to improve the returns. And so, our farms have appraised at or above the price we bought it at. So the bank said, “Yes, you got it at the right price.” So that’s a great third-party independent validation. Once the farm is up and operating, let’s kind of talk through those different investment models that we have. And we’ll start with a row crop farm. So this will be corn or soybeans, typically. We actually don’t have any wheat yet, maybe you can hook us up, Meb. Those deals typically are a rental model, where we rent it out to a farmer every year. The farmer pays upfront in March. And you as an owner have zero exposure to anything that happens in the harvest.

So it’s great that you were insured, most farmers are, especially the ones we work with. They’re proactive, they’re smart, they insure, they manage everything well. And so, we rarely have run into this situation. But you as an investor and us as FarmTogether, we have no risk there. The farmer pays us upfront for the year. And then next year, it’s the same thing. So that’s what’s great about the property. Now, some things that are kind of smaller in risk is the farmer needs to replace the NPK. So the fertilizer in the field before and after. But that’s not really that big. And then besides that, I mean, it’s just the field, unless you start dumping nuclear waste there, it’s really hard to screw it up. And so just making sure that the property is insured, liability, there are property taxes, and that’s it. And that’s why row crops, you know, you talked about our target returns. So, for you listeners, out typical target net IRRs, net annual returns are 7% to 12%. And the row crop deals because of that low risk are typically in the 7%, even 6% range sometimes, which I think is still kind of a good money market-type investment in my view.

Meb: Yeah, I mean, look, you have U.S. dividend yield at 1.3 and U.S. bond about the same. And it’s a pretty low opportunity set in traditional public assets. So, anything that’s north of five sounds like gravy. You guys talk about in reference leverage. What does that mean? How do you guys do it? What’s the thought process behind it?

Artem: Yes, so, in permanent crops, leverage, more or less leverage, typically, it’s under 40% LTV, is a great way to boost the returns without introducing too much additional risk. And it’s a way for investors to get the benefit of buying a fairly attractively priced agricultural loans at 3.5%, 4.5%. And so, it’s typically working with Farmer Mac system and getting loans through that. It’s asset level loan, non-recourse. Typically, it’s a purchase loan and a development loan, fixed interest rates on purchase loan and then variable on development loan, but with some safeguards there. And most of our deals in permanent crops have had loans, no issues there whatsoever on any of those deals.

Meb: How often are you guys, when you’re talking about sort of the, once you buy a property putting a fair amount of work into it? I mean, I was looking at the pear one and you guys are having to convert to organic, which can be a multi-year process for certification, if I recall. How often is it turnkey and how often are you guys actually, like, “We got to put some elbow grease and some dollars into this?”

Artem: I would say 70% right now has been more, like, elbow grease and 30% turnkey. And that’s, again, because that’s what you pay us for, right? Is finding the right operators, putting in the work to redevelop to oversee something that is value-added, and not just from development perspective, but also sustainability. Not to jump too far ahead, but every farm that we have is under Leading Harvest standard. And there’s a number of things that we look at and budget for to improve the sustainability profile of a farm.

Meb: Can you expand that a little bit? Because most listeners may not have heard of Leading Harvest and what that actually means.

Artem: Yeah, so, Leading Harvest is a new third-party audited sustainability standard that was introduced by the farmland investment industry because they realized that, look, we all need to be part of the solution. So, it’s 13 different metrics. Everything from soil, to fertilizer, to water use, to working with local communities, to working with, you know, workers that define very clearly the metrics you have and that you’re achieving. And then there’s a score table.

How many acres do you till? How many acres do you plant cover cropping? Is it 10%? Is it 100%? And so, it’s hard to greenwash something, right? There’s someone who shows up and they go, “You did cover cropping, you did not? And how many acres? You used this much water last year, you used this much this year. Adjusted for weather, you are using less because you installed the new sprinkler system, a new double drip irrigation. You’re not flood irrigating anymore.” What I like about it is that it’s just a very clear, like, I’m a very pragmatic numbers guy. It’s very clear what you need to do. It’s not like, oh, we have this tree and there are birds. And so, I like that standard a lot.

The second one we’re enrolled into is the Indigo Carbon Credits system. So this is, if the Leading Harvest one is a bit of playing defense, how do we use fewer resources? The Carbon Credits is, how do we actually have farmers get paid for doing what they’re already doing, maybe a bit better, and recapturing carbon from the atmosphere through growing plants? And I think that’s really cool additional way to pay farmers and pay investors.

Meb: How often do you guys consider, with these properties, alternative sources of yield? I’m thinking of solar, or mineral rights, or any other things.

Artem: We have a few row crop farms where they’re getting a payment right now for wind option. So a wind company is paying them every year for the option to develop a wind farm there. And if they do, it will be an even higher payout. So, yeah, that’s quite a nice additional chunk of change there.

Meb: Talk to us a little bit about how you’ve approached expansion and funding. We’re here toward the end of summer 2021. How’s that been? The VC has been pretty receptive to the story? Who’s been kind of yells investors that you’ve targeted? How’s that experience been?

Artem: Yeah, absolutely. So we are a VC-backed company and angel-invested company. The main backers are Franklin Templeton. They’re the kind of large asset manager. We have some angels that used to be at BlackRock, very senior people there. We have Lucid Collective. It’s a VC fund in New York, that is more like FinTech ag fund, and then a number of angels that hail from very relevant backgrounds in tech, ag tech, sustainability, just startups. We’re also generating quite a bit of revenue. And so, we’ve been self-funding a lot of recent expansion. To date, this is public, we raised about 9 million. We’re always open to the right partners, but we’re not raising right now. It’s really been heads down and executing what’s working quite well, I think. So just focusing on making sure our deals perform and new deals.

Meb: So, what are you guys thinking about next? I’m sure you have your hands full with simply the day-to-day sourcing operations, launching funds. But as we look out the next one, three, five years, what are you guys, when you sit in the rocking chair, drinking ice tea, thinking about what’s next? What are some of the things you guys are thinking about?

Artem: First of all, thinking about how do we have more states and more types of crops available to people. It’s also innovating on the types of financial products that we give to the farmers, because right now it’s really maybe two different ways we work with farmers, either buy the farm outright, or sometimes it’s buy and sell back after some years. And there are just so many more things one can do that I think would be really exciting for farmers for investors. International, I think that’s important, you know, at the end of the day, agriculture is global. And so, if you want a well-diversified portfolio, then going international is important. I think the secondary liquidity market is very important to develop. And then, of course, everything needs to be underpinned by this sustainability, regenerative, aggressively attacking climate emergency now through our portfolio.

Meb: So if you did look beyond our borders, what would be the most likely targets? Would it be Canada, Mexico, or would it be South America, Europe?

Artem: Canada, Mexico, yeah, Canada is great. Mexico, Chile. Australia has one of the most developed farmland markets. It again comes back in a lot of ways to the property rights and making sure that we feel comfortable in the long-term protection of the assets by our investors. And so, Mexico, obviously, it’s great as an agricultural state, but you would have to analyze the property rights there. Chile’s well-known location. When I was at Ontario Teachers’, it was already investing ’05, ’06 into infrastructure, things like that. And then Canada, of course, right up there, as safe as U.S.

Meb: How do you guys think about full cycle? Farmland has been through the cycles over the years, just like any asset class. You had a overleveraged period five decades ago or whatever it was, and then various times of boom and sideways. And it seems to be we’re at a period of starting to boom. There’s kind of a fallow period for a handful years in the mid 20 teens. So you guys probably entered it like the best possible time.

Artem: Yeah, I think so.

Meb: Do you see any signs of excess in any pockets? Do you worry about anything in particular, as far as the farmland sector, in general? What keeps you up at night?

Artem: In terms of the cycle, no one can predict it. But when I looked at it and starting 2018, we had a few really good years in the early 2010s. And then it was a few years of still really a nice kind of, you know, 4% or 5% but sort of modest, healthy growth. And so, it didn’t feel like you’re entering at some sort of peak of the cycle. And I think right now we’re seeing the upswing. I don’t see any excesses. Like you mentioned, it’s an illiquid market. It’s a highly fragmented market. It’s also most of the investors have not entered this market yet. What I like about what we’re building is that, in a lot of sectors, with crypto being another exception, you typically have the large sophisticated hedge funds, pension funds going in and taking all the best stuff first. Here, I think it’s the other way around, like, we get to pick all the best up first, and then when all the big capital enters, the retail investors will have an upper hand. So I like that a lot. I don’t see any excesses because it’s a long-term asset. People take their time to think. This is not GameStop.

Meb: How many farms have you offered at this point?

Artem: About 30 now.

Meb: Are there any investors that have literally bought like 20 farms at this point?

Artem: Not 20 but definitely have people that have like 7, 8.

Meb: Cool. Yeah. Because to me, the whole point of this is the opportunity to have a diversified portfolio across crop and geography, and even time, it’s almost like a private equity vintage VC sort of layering in. And any one farm, any one crop can have a challenging environment, but you get stuff that’s totally uncorrelated to me is such an obvious investment. Talk to me about, is there ever in the cards, because there’s too much work just impossible from the standpoint, is there any way that you guys eventually spin up an actual all-in-one sort of diversified fund, whether it’s public, or private, or anything in between?

Artem: Oh, yeah, definitely. Yeah, definitely in the cards.

Meb: The farmland, read surprise, there’s only been one or two. And maybe there are good reasons for that. But that to me is obvious. Or even the interval funds, they have some of these big dudes who is at Nuveen. There are a couple of others that do big farmland offerings, but they’re at sort of a different scale.

Artem: As soon as we have one, I will definitely let you know.

Meb: Good, man, I love that idea. We’ve kept you for a long time. As we start to wind down, anything that we’ve missed or didn’t cover today that you think is particularly insightful that people should hear about or that we glossed over?

Artem: I think we touched a lot on the risks, which is great that you kept highlighting that. It’s always important in investing to talk about the risks. We talked about the profile of the farm’s 10-year hold, probably returns 7% to 12%, net IRR’s cash yield, diversification across crops and geographies, climate, sustainability, Portland pizza. I mean, I think we covered all the ground.

Meb: Good. Well, I’m looking forward to getting back up to Portland. You can take me on a farm tour. We’ll get some pizza. Do you guys have any farms driving distance from Portland?

Artem: Yeah, we do. We have a bunch of hazelnut farms. And probably the hazelnuts, I’m not sure where they came from but the Oregon hazelnuts are huge, delicious, very savory, and very juicy. Worst hazelnuts come from Turkey. And they’re like kind of small and drier. So, Oregon hazelnut industry is just exploding. And yeah, we’ll load you up for supply for a year.

Meb: Resources, best place to go just to crank on y’all’s website, FarmTogether?

Artem: Farmtogether.com, register, you can email us, you can call us, go into webinars. My personal email, artem@farmtogether.com, reach out. Always happy to chat to anyone who’s passionate about the space, passionate about FinTech, passionate about climate change, passionate about agriculture, of course. We’re hiring across the board. So if someone’s interested in a particular position or want to kind of choose your own journey a little bit, say, “I don’t quite fit but I want to help y’all,” as you say.

Meb: Yeah, there you go. Well, listeners, be thoughtful and mindful. He’s generous enough to give you his email. Don’t abuse it with crazy questions about when they’re going to buy your cannabis farm that’s in your backyard. Artem, what’s been your most memorable investment in your career, either at one of these funds or institutions or on your own? Anything come to mind, good, bad, in between?

Artem: Almost every farm deal we’ve done has been so interesting in a lot of ways, but, you know, I don’t want to give a half-assed answer. So, I would say in 2013, I had the fortune to meet Vitalik Buterin, co-founder of Ethereum in Toronto. And this was just like a little building where crypto enthusiasts gathered. And I didn’t know who he was. And I was pitching him an idea of my own, seeing if he wanted to come join. He’s like, “No, I’m working on this kind of decentralized computing on blockchains.” I’m like, “Okay, well, that sounds very big.” And then I was like, “You know what? This kid might be crazy but I should invest a little bit.” And I didn’t invest much as I should have, I’m not a crypto millionaire by any kind of imagination, but it’s just one of those things where it’s sort of he’s either crazy or genius. And we all know who he is now. And I think that was just such a random encounter and we still have a couple of emails I exchange with my friends where they all said that he was crazy and I shouldn’t be spending time with this.

Meb: That’s the beauty of just the randomness of life. Like, you meet someone in a certain place and time, and just clicks or it doesn’t. And I love those stories because it just shows all the serendipity and just randomness of life about showing up, meeting people, and being willing to try new things.

Artem: Indeed. Indeed.

Meb: Artem, it’s been a blast. Thanks so much for joining us today.

Artem: Thank you, Meb. It was awesome.

Meb: Podcast listeners, we’ll post show notes to today’s conversation at mebfaber.com/podcast. If you love the show, if you hate it, shoot us feedback at feedback@themebfabershow.com. We love to read the reviews. Please review us on iTunes and subscribe to the show anywhere good podcasts are found. Thanks for listening, friends, and good investing.